February 12, 2014

Summary of Consolidated Financial Results for the Third Quarter of the Year Ending March 31, 2014
SRA Holdings, Inc.
(URL: http://www.sra-hd.co.jp/)
Stock listing:Tokyo Stock Exchange
Code number:
3817
President:
Toru Kashima
For inquiries, please contact:
Makoto Kitai, General Manager, Finance Department, Administrative HeadquartersTel:(03)-5979-2666
Scheduled date of submission of quarterly securities report:
February 13, 2014―
Scheduled commencement of dividend payment:
Quarterly Results Supplemental Materials
Yes
Quarterly Results Presentation Meeting
No
Company name:

1. Consolidated results for the third quarter of the fiscal year ending March 2014
(from April 1, 2013 to December 31, 2013)(1) Consolidated Operating Results (cumulative total)
Net Sales

Third quarter of fiscal
2014
Third quarter of fiscal
2013(All amounts rounded down, % change YoY)
Ordinary Profit

Operating Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

24,765

9.3

1,543

30.4

2,015

38.0

1,139

41.6

22,663

(4.1)

1,183

(4.1)

1,460

8.9

804

20.7

Note：Comprehensive Income
Third quarter of fiscal 2014: ¥ 1,225millions (82.2%)
Third quarter of fiscal 2013: ¥ 672millions(103.0%)

Third quarter of fiscal
2014
Third quarter of fiscal
2013

Net Income

Net Income

per Shareper Share after Dilution

Yen

Yen

87.86

87.31

61.23

61.22

(2) Consolidated Financial Position

Third quarter of fiscal
2014
Fiscal 2013

Shareholders’ Equity Ratio

Total Assets

Net Assets

Millions of yen

Millions of yen%

28,49816,45957.6

28,133

17,35961.6

Reference: Shareholders’ equity
Third quarter of fiscal 2014: ¥ 16,416millions
Fiscal 2013: ¥ 17,319millions

2. Dividends
Dividend per Share
End of First Quarter
Fiscal 2013
Fiscal 2014

End of Second QuarterEnd of Third Quarter

Yen

Yen

Yen

Yen

Yen

―
―

0.00
0.00

―

45.00

45.00

―

40.00

40.00

Fiscal 2014 (forecast)
Note: Revision of dividend forecast in this quarter:No
1Year-end

For the Year

3. Consolidated Earnings Forecast for Fiscal 2014 (from April 1, 2013 to March 31, 2014)(% of change from FY2013）
Net Income
Net Sales

Operating Income

Ordinary Profit

Net Income
per Share

FY2014

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

34,900

8.5

2,900

19.0

3,000

4.0

1,860

10.6

146.59Note: Revision of consolidated results forecast in this quarter:No*In the third quarter of the consolidated fiscal year, the Company acquired 1,300,000 treasury shares. The Company calculated “Net income per share” in theConsolidated Earnings Forecast using the average number of shares over the period that reflected the acquisition of the aforementioned treasury shares.

4. Others(1) Changes to significant subsidiaries during the current period :No(2) Application of simplified accounting and application of special accounting :No(3) Changes in accounting principles, changes in accounting estimates, and restatements
1. Changes caused by revision of accounting standards, etc. :No
2. Changes other than 1. above:No
3. Changes in accounting estimates:
No
4. Restatements:
No(4) Number of shares outstanding (common stock)
1. Number of shares outstanding (including treasury stock)
Third quarter of fiscal 2014:15,240,000 sharesFiscal 2013:15,240,000 shares
2. Number of treasury stock
Third quarter of fiscal 2014:
3,394,210 sharesFiscal 2013:
2,101,709 shares
3. Average number of shares over period (consolidated total for quarter)
Third quarter of fiscal 2014:
12,963,848 shares
Third quarter of fiscal 2013:13,138,331 shares*Indication of quarterly review procedure implementation status
This earnings release is not subject to the quarterly review process as required by the Financial Instruments and Exchange Act of Japan.
As of the date when this earning release was issued, the review process on quarterly financial statements as required by the Financial
Instruments and Exchange Act had been finished.

*Explanation relating to the appropriate use of results forecasts, and other noteworthy items
Forward-looking statements in this earnings release, such as forecasts of results of operations, are based on the information currently
available and the certain assumptions that we regard as reasonable and therefore actual results may differ materially from those containedin or suggested by any forward-looking statements.

2

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2014

1. Qualitative Information Concerning Third-Quarter Consolidated Business Results(1) Explanation Concerning Business Results
During the third quarter of the fiscal year (April 1, 2013 to December 31, 2013), the Japanese economy sustained amoderate recovery owing to such factors as a pickup in personal consumption and production as well as to an
improvement in corporate earnings.
In the information services industry, IT investments moved on track to a recovery thanks to demand for systems
integration at megabanks and demand in the securities industry for program-related projects (Nippon Individual
Savings Account (NISA) program for tax-free small-amount accounts). Nevertheless, the current environment fororders remained harsh due to continued intensifying competition.
Amid this business environment, in the third year of its Medium-Term Management Plan, the SRA HoldingsGroup implemented the following specific measures in line with efforts to “undertake structural reforms in existing
businesses” as well as our “own IP products business” x “overseas business,” which is our medium- and long-term
growth strategy.
■Undertake structural reforms in existing businesses
As measures to expand orders and sales by strengthening business capabilities, we created new projects throughproposal-based sales and strengthened our order management structure. As a result of these efforts, Advanced
Integration Technology, Inc. (AIT) and Software Science Inc. recorded increases in sales over the same period of theprevious fiscal year.
Meanwhile, to build a high-profit production structure we continued to promote initiatives for realizing anappropriate level of production overhead costs.
■“Own IP products business” x “overseas business”
We made additional business investments in Proxim Wireless Corporation, Kingnet and Cavirin Systems, Inc. withthe aim of further implementing our medium- and long-term growth strategy of promoting our own IP products
business in such growth markets as China, India and ASEAN.
In our own IP products business in Japan, we focused on expanding sales of such products as our comprehensive
education solutions “UniVision,” our mail archive “MailDepot,” our digital content service BELEGA-DC and our EC
building service BELEGA-EC.
In the healthcare field, where markets are expected to grow, we made a business investment in Practechs, Inc. as
a new business model. Along with this investment, we collaborated with Practechs and developed and beganproviding the HEALTHPLAYER* application for smartphones.
*

HEALTHPLAYER utilizes cloud computing to safely record and store such healthcare data as a person’s height, weight, and calorie

consumption that are obtained from users via their smartphones and other devices. This application is useful for personal healthmanagement. Practechs is using SRA’s recommendation technologies and performing analysis for distributing articles and related
advertisements, such as those about lifestyle modifications, tailored to the health condition of each individual user.

Due to the above initiatives, our consolidated business results for the third quarter of the fiscal year were as follows.
In terms of net sales, all three business segments, specifically the Systems Development business, the System
3

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2014

Operations and Infrastructure Development business and the Product Sales business, recorded increases in net sales.
As a result, consolidated net sales amounted to ¥24,765 million, a 9.3% increase from the same period of the previous
fiscal year.
At the profit level, operating income rose 30.4% from the same period of the previous fiscal year to ¥1,543
million due to an increase in gross profit accompanying growth in sales. Ordinary profit rose 38.0% from the same
period of the previous fiscal year to ¥2,015 million due to foreign exchange gains and net income increased 41.6% to¥1,139 million.
A loss on valuation of investment securities recorded as an extraordinary loss in the first quarter was no longer
required to be recorded in the third quarter because of a recovery in stock prices.
The Company applied the reversal method (araigae method, allows for upward revisions at the beginning of thenext fiscal period) for the impairment of investment securities during the quarter and applies the lower of cost or
market method (kirihanashi method, with the same carrying values at the end of the period and the beginning of thenext period) at the end of the fiscal year. Therefore, depending on the market value of securities at the end of thisfiscal year, there is the possibility that a loss on the valuation of securities will be recorded as an extraordinary loss.
As detailed above regarding consolidated results for the third quarter of the fiscal year, net sales and profits
increased from the same period of the previous fiscal year.
A summary of consolidated business results for the third quarter by business segment is shown below.
1) Systems Development
Despite a decline in sales to electric power industries, the Systems Development business recorded increases in sales
to banks, securities companies and non-life insurance companies. As a result, net sales edged up 9.0% from the same
period of the previous fiscal year to ¥12,814 million.
2) System Operations and Infrastructure Development
Although there was a slight decrease in university-related orders, there was an increase in orders from companies. As
a result, net sales of the System Operations and Infrastructure Development business increased 5.7% from the same
period of the previous fiscal year to ¥2,627 million.
3) Product Sales
AIT recorded favorable sales, mainly in the financial sector and medical sector. As a result, net sales of the Product
Sales business increased 10.7% from the same period of the previous fiscal year to ¥9,324 million.
(2) Explanation Concerning Financial Condition
With regard to financial condition for the third quarter, total assets amounted to ¥28,498 million, an increase of 1.3%
from the end of the previous fiscal year. Total liabilities increased 11.7% from the end of the previous fiscal year to¥12,038 million and net assets decreased 5.2% to ¥16,459 million from the end of the previous fiscal year. Details of
the principal increases and decreases from the end of the previous fiscal year are as follows.
(Total Assets)
Merchandise and finished goods rose ¥756 million to ¥998 million owing to such factors as an increase intransactions for device sales. Work in process increased ¥787 million to ¥1,798 million due to such factors as a rise incontracted development projects.
4

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2014

Short-term investment securities increased ¥2,607 million while investment securities declined by acorresponding amount due to the transfer of this amount to current assets.
(Total Liabilities)
Accounts payable—trade increased ¥1,050 million to ¥3,497 million due to a rise in purchases. Short-term loans
payable increased ¥315 million to ¥1,544 million. On the other hand, provision for bonuses declined ¥242 million to¥351 million. Income taxes payable decreased ¥221 million to ¥302 million owing to the payment of corporate
income taxes.
(Total Net Assets)
Foreign currency translation adjustments when converting the impact of exchange rates on overseas subsidiaries
increased ¥272 million to a positive ¥124 million. Retained earnings increased ¥547 million to ¥13,337 million.
Conversely, treasury stock increased ¥1,536 million to negative ¥2,930 million due to the acquisition of treasury
stock.
(3) Explanation Concerning Consolidated Results Forecast and Other Future Projections
No revision has been made to forecasts in Summary of Consolidated Financial Results for the Year Ended March 31,
2014 released on May 9, 2013.

2. Summary Information (Notes)(1) Significant changes involving subsidiaries during the period: None
(2) Application of simplified accounting methods and accounting methods specific to the preparation of the quarterly
consolidated financial statements: None

(3) Changes in accounting principles, changes in accounting estimates and restatements: None

5

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2014

3. Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Millions of Yen)
End of third quarter of

Fiscal 2013(as of March 31, 2013)

fiscal 2014(as of December 31, 2013)ASSETS
Current assets:
Cash and deposits

7,197

7,796

Notes and accounts receivable—trade

6,299

4,568

Short-term investment securities

1,002

3,113

Merchandise and finished goods

242

998

Work in process

1,011

1,798

Deferred tax assets

531

439

Other

1,222

2,090

Allowance for doubtful accounts

(35)

(31)

17,473

20,774

349

336

(253)

(237)

96

99

569

571

(522)

(515)

46

55

119

111

Accumulated depreciation

(77)

(72)

Other, net

42

39

184

193

Other

894

718

Total intangible assets

894

718

Investment securities

7,137

3,885

Deferred tax assets

1,049

1,196

Guarantee deposits

402

370

Other

1,093

1,469

Allowance for doubtful accounts

(14)

(15)

Allowance for investment loss

(87)

(96)

Total investments and other assets

9,580

6,810

Total current assets
Noncurrent assets:
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Other

Total property, plant and equipment
Intangible assets

Investments and other assets

6

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2014

Total noncurrent assets
Total assets

7

10,6607,723

28,13328,498

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2014

(Millions of Yen)
End of third quarter of

Fiscal 2013

fiscal 2014(as of March 31, 2013)(as of December 31, 2013)

LIABILITIESCurrent liabilities:
Accounts payable—trade

2,447

3,497

Short-term loans payable

1,229

1,544

Accrued expenses

590

704

Income taxes payable

523

302

Accrued consumption taxes

241

176

Provision for bonuses

594

351

Provision for directors’ bonuses

50

63

Provision for loss on construction contracts

181

387

Asset retirement obligations

17

9

Other

807

1,182

6,683

8,218

Long-term loans payable

300–

Deferred tax liabilities

3

4

3,620

3,641

165

155

0

17

4,090

3,819

10,774

12,038

Capital stock

1,000

1,000

Capital surplus

4,483

4,483

Retained earnings

12,78913,337

Treasury stock(1,393)(2,930)Total shareholders’ equity

16,87915,890

Valuation difference on available-for-sale securities

588

420

Foreign currency translation adjustments

(148)

124

Total accumulated other comprehensive income

439

526

39

43

Total net assets

17,35916,459Total liabilities and net assets

28,13328,498

Total current liabilities
Noncurrent liabilities:

Provision for retirement benefits
Provision for directors’ retirement benefits
OthersTotal noncurrent liabilities
Total liabilities
NET ASSETS
Shareholders’ equity

Accumulated other comprehensive income

Subscription rights to shares

8

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2014

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income(Quarterly Consolidated Statements of Income)(Consolidated Cumulative Total for Third Quarter)(Millions of Yen)
Consolidated

Consolidated

cumulative total for

cumulative total forthird quarter of fiscal

third quarter of fiscal

2013 (from April 1,2014 (from April 1,2012 to December 31,

2013 to December 31,

2012)

2013)

Net sales

22,66324,765

Cost of sales

18,75820,440Gross profit

3,904

4,325

Selling, general and administrative expenses

2,720

2,782

Operating income

1,183

1,543

Interest received

143

144

Dividends received

34

44

Foreign exchange gains

87

200

Other

62

123

Total non-operating income

327

513

Interest expenses

21

20

Transfer agent processing fee

16

19

Other

13

0

Total non-operating expenses

51

41

1,460

2,015

Gain on sales of investment securities
Gain on reversal of loss on valuation of investment
securities

11

5

–

6

Reversal of allowance for investment loss

3

2

Other

0

0

Total extraordinary income

16

14

Loss on retirement of noncurrent assets

02

Loss on liquidation of subsidiaries and affiliates

–

4

Other

0

0

Total extraordinary loss

07

Non-operating income

Non-operating expenses

Ordinary profit
Extraordinary income

Extraordinary loss

9

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2014

1,475

2,022

Income taxes-current

582

835

Income taxes-deferred

88

48

Total income taxes

670

883

Income before minority interests

804

1,139

Net income

804

1,139

Income before minority interests

804

1,139

Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustments

(159)

(189)

27

272

(131)

86

672

1,225

672

1,225

－

–

Income before income taxes and minority interests(Quarterly Consolidated Statements of Comprehensive Income)(Consolidated Cumulative Total for Third Quarter)

Total other comprehensive income
Comprehensive income(breakdown)Comprehensive income attributable to parent
company shareholders
Comprehensive income attributable to minority
shareholders

10

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2014

(3) Notes Concerning Consolidated Financial Statements for the Third Quarter(Notes Concerning Premise of Going Concern)
None(Notes on Significant Changes in Shareholders’ Equity)
In accordance with a resolution by the Board of Directors on November 19, 2013, the Company determinedmatters concerning the repurchase of treasury stock pursuant to Article 156 of the Corporate Law of Japan as
applicable pursuant to the provisions of Article 165, Paragraph 3 of the Corporation Law of Japan, and theCompany repurchased treasury stock on November 20, 2013.
Type of shares repurchased:

Common shares

Number of shares repurchased:

1,300 thousand shares

Total repurchase price:¥1,544 million

Repurchase method:

Purchased through Tokyo Stock Exchange Trading Network Off-Auction
Own Share Repurchase Trading System (ToSTNeT-3)(Segment Information)
I. Consolidated cumulative total for third quarter of fiscal 2013 (from April 1, 2012 to December 31, 2012)
1. Information concerning net sales and income or losses for each reporting segment(Millions of yen)AmountSystemOperations

Systems
Development

andInfrastructurerecorded on
Product

Adjustment

Total

Sales

*1

the quarterly
consolidated

amountstatements ofDevelopment

income*2

Sales(1) Sales to
Customers

11,752

2,485

8,425

22,663－

22,663

36

254

380

670

(670)

－

Total sales

11,788

2,740

8,805

23,333(670)

22,663Operating income

1,294

462

367

2,123

(940)

1,183

(2) Intersegment
sales ortransfers

Notes:
1. The segment income adjustment of minus ¥940 million is a company-wide expense not apportioned to any reporting segment.
Company-wide expenses are general and administrative expenses and R&D expenses not attributed to any reporting segment.
2. Segment operating income is adjusted in operating income on the quarterly consolidated statements of income.

2. Information concerning impairment loss on fixed assets or goodwill for each reporting segment
None

11

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2014

II. Consolidated cumulative total for third quarter of fiscal 2014 (from April 1, 2013 to December 31, 2013)
1. Information concerning net sales and income or losses for each reporting segment(Millions of yen)AmountSystemOperations

Systems
Development

andInfrastructurerecorded on
Product

Adjustment

Total

Sales

*1

the quarterly
consolidated

amountstatements ofDevelopment

income*2

Sales(3) Sales to
Customers

12,814

2,627

9,324

24,765－24,765

26

215

355

597

(597)

－

Total sales

12,841

2,842

9,679

25,363(597)

24,765

Operating income

1,342

537

602

2,483

(939)

1,543

(4) Intersegment
sales ortransfers

Notes:
1. The segment income adjustment of minus ¥939 million is a company-wide expense not apportioned to any reporting segment.
Company-wide expenses are general and administrative expenses and R&D expenses not attributed to any reporting segment.
2. Segment operating income is adjusted in operating income on the quarterly consolidated statements of income.

2. Information concerning impairment loss on fixed assets or goodwill for each reporting segment
None(Significant subsequent events)
The SRA Group provided a loan to Proxim Wireless Corporation with the aim of strengthening its business andcapital alliances with that company. The Board of Directors of SRA convened on January 21, 2014 and resolved toextend the repayment date for an existing loan.
Amount of loan:

US$7,375 thousand

Load repayment date before change:

January 4, 2014

Loan period after change:

January 4, 2015

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SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2014

4. Other Information
1. Status of Production, Orders and Sales(1) Production amounts
Production by segment in the third quarter of the fiscal year ending March 31, 2014 is as follows.
Consolidated cumulative total for
Segment information by type of businessthird quarter of fiscal 2014 (from
April 1, 2013 to December 31,% change YoY

2013)
Systems Development (Millions of Yen)
System Operations and Infrastructure
Development (Millions of Yen)
Total (Millions of Yen)

13,536

106.8

2,646

104.6

16,182106.5

Notes:
1. Amounts are based on sales price.
2. The amounts above do not include consumption tax.
3. Intersegment transactions are offset.

(2) Purchase amounts
Purchases by segment in the third quarter of the fiscal year ending March 31, 2014 are as follows.
Consolidated cumulative total for
Segment information by type of businessthird quarter of fiscal 2014 (from
April 1, 2013 to December 31,% change YoY

2013)
Product Sales (Millions of Yen)

6,598

122.5

Total (Millions of Yen)

6,598

122.5

Notes:
1. Amounts are based on purchase price.
2. The amounts above do not include consumption tax.
3. Intersegment transactions are offset.

(3) Status of orders
Status of orders by segment in the third quarter of the fiscal year ending March 31, 2014 is as follows.
OrdersSegment information by type of business

Order backlog

received% change YoY(Millions of% change YoY

Yen)

Yen)
Systems Development(Millions of

14,302

13

115.7

5,747

128.6

SRA Holdings, Inc. (3817) Summary of Third-Quarter Consolidated Financial Results for the Year Ending March 31, 2014

System Operations and Infrastructure

2,045

105.9

881

103.9

Product Sales

10,818

128.1

4,700

131.7

Total

27,166

119.5

11,329127.5

Development

Notes:
1. Amounts are based on sales price.
2. The amounts above do not include consumption tax.
3. Intersegment transactions are offset.

(4) Sales amounts
Sales by segment in the third quarter of the fiscal year ending March 31, 2014 are as follows.
Consolidated cumulative total for
Segment information by type of businessthird quarter of fiscal 2014 (from
April 1, 2013 to December 31,% change YoY

2013)
Systems Development (Millions of Yen)

12,814

109.0

2,627

105.7

Product Sales (Millions of Yen)

9,324

110.7

Total (Millions of Yen)

24,765

109.3

System Operations and Infrastructure
Development (Millions of Yen)

Notes:
1. Amounts are based on sales price.
2. The amounts above do not include consumption tax.
3. Intersegment transactions are offset.

14